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Saturday, April 17, 2021

The biggest problem for businesses in the Coen nomination: a potential strikeout

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For decades, administrative law has served as an arcane dumping ground for all manner of court-approved terminations, lawsuits over unclear benefits claims and other requests for review from hundreds of millions of Americans.

Those courts were established to fend off frivolous lawsuits, but they also became a convenient way for companies to unwind relationships for any number of reasons. The question, from an objective business perspective, has always been, “How do we get around the process?”

The Federal Election Commission’s now-defunct limit on corporate political spending probably made that easier than it used to be. Better mass-merchandise appeals to emotions and patriotic identity, as the Koch Brothers have, seem to have done it again, as do campaigns for leniency for proprietary officers who should have been fired but instead received a payout from the company. But internal action gets little public attention.

The federal judiciary has shown great deference to even the most illegible motions, papers and requests. Every potential judge is carefully vetted before going through the process of confirmation to the U.S. Court of Appeals for the District of Columbia Circuit, but even new circuit court judges — who will ultimately decide any action against the company — get phased in slowly, often three years after entering the federal bench. That is what the Trump administration and Rod Rosenstein, the deputy attorney general, have now decided to do with Thomas Coen, who last week became the highest-ranking corporate litigant to ever be made a federal judge.

The most important change in the Coen nomination is that this judge will be being eased into service as a lower-court judge. He will not hear litigation until after the 2020 election.

Mr. Coen served as a Department of Justice official under George W. Bush, prosecuting national security cases for the government. He also represented Donald Trump, in a defamation case about the “Trump University” scam. Mr. Coen argued against a televised proposal that Donald Trump could run for president — in part to deny Mr. Trump the opportunity to be sued — and against a federal judge who refused to shut down the free-speech lawsuit. That last one was against Trump University. The criticism Mr. Coen received for defending Trump University was routine. These past actions raised concerns that he had a narrow view of the First Amendment.

That said, Mr. Coen told The Washington Post, “Every judge will weigh First Amendment issues differently.”

Whatever the case, there are still some good reasons why businesses should want to be left alone by the courts, even as the legal cases pile up, as judges decide many of them themselves rather than hiring private law firms, which could have added labor and costs. Companies won’t be happy if a judge cancels the contract, especially if they have invested resources to get the deal done. But if a judge tosses out a lawsuit because of a procedural error, that reduces the cost of the encounter.

Companies complain that most administrative law cases are settled with no court action, save the occasional public declaration from a company that its preferred procedure is valid. The Justice Department has decided to continue to force companies to settle this way. The chief judge in the lower courts has only limited power to halt cases by issuing an order to dismiss, and that is whether the case survives or dies. The difference, under Mr. Coen, will be that there is no chance of a dismissal or a continuing process of discovery until after an election.

The Trump administration and Congress may have made it easier for companies to leave the appeals process behind, but for companies that absolutely insist on a judicial determination of a few issues, the prospect of a campaign-season delay is not a good thing. That is particularly true when it comes to keeping the records behind an issue before an audience that might turn out to be reconsidering an earlier decision.

Companies should eventually find some way to get around the Administrative Procedure Act, which provides a road map for seeking an injunction or, if not, a filing at the federal district court. A better solution would be to consider offering settlement options to complainants — a practice that the Justice Department has in some cases.

But with a Republican-controlled Congress, that is unlikely, at least in the short term.

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